Investor Relief as Alitalia Attracts 11 Potential Investors

CNBC.com

Tuesday, 30 Jan 2007 | 3:53 AM ETCNBC.com

SHARES

A deadline for Alitialia’s potential bidders to express interest in buying the loss-making airline, which expired Monday, brought forward a surprising 11 offers, but failed to attract partner Air France KLM.

Most of the interest came from private equity firms, including Texas Pacific, and two of the total 11 have already been discarded on the grounds of not being genuine offers.

The 11 investors "are more than we expected, so we are very satisfied," said Transportation Minister Alessandro Bianchi. "We are interested in a serious operator and I believe there are some among these."

One of the interested parties is Unione Piloti who currently acts as Alitialia's pilot's union. “We think we can do much better (than the current management). What we see in the near past is the management didn’t change anything,” said Massimo Notaro, the Chairman of the union.

“There is relief in the market that there is a lot of interest (in Alitalia), even though the accounts are so ugly…probably it will be an Italian solution,” Andrea Cabrini, managing editor of CNBC Class in Italy, reported. Shares in Alitalia rose 3% in early Italian trade

Air France-KLM, who is a long-term commercial partner of Alitalia, did not express interest by the deadline, saying conditions were not right for a bid now.

The government owns 49.9% of Alitalia and is looking to shed at least 30.1%. There's little speculation on how much the stake would be worth but the government wants to ensure that any buyer does not cut jobs. Alitalia currently employs 18,000 workers.

Alitalia has been beset by political hurdles which have added to its current loss-making woes. The company expects a loss of around 380 million euros ($490.5 million), which is 72% greater than its previous forecast of 221 million euros loss.

“The problem, in my view, is after this stage, and how the government is going to be dealing with restructuring and staff levels,” Christian Oddono, head of investment advisory at Actinvest Group, told “Squawk Box Europe" on Monday. “Because it doesn’t make any sense to privatize a company and not let the buyer restructure. Alitalia needs some of that."

Without a successful takeover bid, Alitalia would be unlikely to last more than a year on current liquidity levels.